NEW YORK, Aug 31 (Reuters) - Global stocks were poised on Friday to end August much as they began the month - under the dark cloud of a potentially worsening trade war.

A closely watched barometer of equities worldwide fell for a second day as a report that U.S. President Donald Trump was preparing to step up a trade war with Beijing dampened risk appetite and erased some gains from a rally this week.

Trump is ready to impose tariffs on another $200 billion in Chinese imports as soon as a public comment period on the plan ends next week, Bloomberg News reported on Thursday. The White House declined to comment.

Trump, in an interview with Bloomberg, also threatened to withdraw from the World Trade Organization if “they don’t shape up,” a move that would further undermine one of the foundations of the modern global trading system.

“It’s very hard to see a decisive resuscitation of risk appetite until these tensions are resolved,” said Paul O’Connor, head of the multi-asset team at Janus Henderson Investors.

“We have learned to under-react to some of the individual headlines because if you try to extrapolate from any of them you could find yourself in big trouble.”

The MSCI All-Country World Index, which measures stocks in 47 countries, shed 0.49 percent for the day, but was set for a 0.3 percent gain for the month.

The modest rise masked a growing chasm between developed and developing countries, with U.S. stocks far outperforming those in emerging markets. The S&P 500, which includes large U.S. companies, is up nearly 3 percent for the month, while the MSCI Emerging Markets index is down by roughly the same margin.

On Friday the Dow Jones Industrial Average fell 71.35 points, or 0.27 percent, to 25,915.57, the S&P 500 lost 5.52 points, or 0.19 percent, to 2,895.61 and the Nasdaq Composite added 13.15 points, or 0.16 percent, at 8,101.51.

Trade anxieties boosted the dollar, seen as a short-term winner if the United States reduces imports. The dollar index rose 0.49 percent.

The Mexican peso lost 0.76 percent versus the U.S. dollar and the Canadian dollar fell 0.71 percent.

While Mexico had negotiated a deal on the North American Free Trade Agreement with the United States on Monday, U.S. and Canadian officials were making a final push to iron out differences ahead of a Friday deadline set by Trump.

U.S. President Donald Trump said in off-the-record remarks to Bloomberg this week that any trade deal with Canada would be “totally on our terms,” the Toronto Star reported on Friday, citing remarks it had obtained.

Canadian officials had earlier expressed concern that a deal will not be concluded on Friday, Canada’s Globe and Mail reported, citing a source familiar with situation.

EMERGING MARKETS ON EDGE

Emerging market currencies showed needed signs of stability even as they were set to post their fifth straight month of losses in dollar terms. An index of those countries’ currencies fell 0.06 percent on Friday.

Currencies in two particularly troubled economies, Turkey and Argentina, strengthened against the dollar .

The Turkish government said it would lower the level of withholding tax on lira bank deposits, while raising it on foreign currency deposits.

In Argentina, investors expect further government spending cuts to be announced on Monday.

In Asia, the Indonesian rupiah hit a nearly three-year low and approached levels not seen since the 1990s Asian financial crisis even as the country’s central bank said it was “decisively” intervening to support the currency. The Indian rupee touched a record low.

Reporting by Trevor Hunnicutt; Additional reporting by Ritvik
Carvalho and Helen Reid in London and Hideyuki Sano in Tokyo;
Editing by Jeffrey Benkoe and Richard Chang